5 Reasons Not to Provide or Patronize Illegal Car Rental Services in Singapore

Published by on . Updated on 18 May 2020

Motorist Ethoz 5 Reasons Not To Provide Patronize Illegal Car Rental Services In Singapore
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More car owners are turning to private hire services and even rental services to earn more money. In this article, we look at 5 reasons not to provide or patronize illegal car rental services in Singapore.

With the rise of the sharing economy in the recent years, there’re more innovative ways for additional incomes. From shared transport, housing, office spaces to lifestyle, the sharing economy offers many new opportunities. In the automotive industry, car owners are starting to look at options like chauffeuring, private hire services, freelance courier, food delivery or even rental services to utilize their asset.

Taking the car rental services in Singapore as an example, here are the various ways to earn additional income.

  • Internet: With the rise of e-commerce, there’re online platforms which allow car owners and patrons to lease and rent vehicles directly.
  • Offline: Some car rental transactions are done via word of mouth while others, through small car rental agencies or dealers (middleman) who lure car owners with additional incomes, offer them upfront payment for their installments to rent out their vehicles.

For car owners who think that these are actually good ideas, do you know of the hidden risks involved? In case you didn't know, in Singapore, you do require a licence to operate as a car rental vendor.

Singapore Law

In Singapore, all legal rental cars need to be registered under an ACRA registered business with the Land Transport Authority (LTA).

Motorist Ethoz Vehicle LicenseMotorist Ethoz Vehicle License 2

Previously, clients could easily differentiate between a private-owned vehicle and legal rental vehicle via the road tax disc displayed at the top left-hand corner of every vehicle windscreen. However, the authorities have discontinued issuing physical road tax discs since 15 Feb 2017 to streamline the process. Moving forward, motorists are advised to keep a copy of their road tax validity printout in the vehicle at all times. They can also check for the proof of the road tax validity via the One Motoring website. Do note that driving a vehicle with an expired road tax is an offence. Drivers will be liable to a maximum fine of S$2,000.

Motorist Ethoz License Plate

Motorist Ethoz License Plate 2

Some established car rental companies’ fleet do comes with custom made car plate frame with the company name.

Under the LTA’s Private Car Rental Scheme , private car owners are allowed to rent out their vehicles on weekends and public holidays under the following terms and conditions. Do note that it’s illegal to extend the rental period across weekdays.

  • The vehicle involved must be registered under the name of a private individual. Company registered cars are not allowed under the scheme.
  • The vehicle is only allowed for private usage only. No chauffeur-driven or private hire rentals are allowed.
  • The Car owner has to ensure insurance coverage for the period of rental. Do take note that some insurance companies do charge extra for such requests. The hirer must also meet the required age and driving experience specified in the insurance policy.
  • Similarly, the hirer must check that the vehicle is adequately covered by insurance for the period of rental.

For car rental patrons, it’s normal to compare several quotes before coming to a decision. However, do think twice and reconsider if you happen to come across a deal which sounds too good to be true.

Pros and Cons of Renting From an Established Car Rental Source VS Illegal Car Rental Source

Let’s take a look at the hidden risks and liabilities involved for both parties.

  • Proper Documentation – Are your rights protected legally?

The presence of proper documentation and system provides clarity, which helps to prevent any future dispute. For smaller rental firms, some rental transactions are perform through verbal agreement out of mutual trust. When things go south, some unscrupulous rental firms will extort clients by charging fines and holding on to deposits. Many of these companies target P-Plate holders or young drivers by offering cheap rental deals and low entry requirements.

For those with proper contracts, do examine the clauses and clarify any doubts with the sales person involved before signing any agreement. Please do not be deceive by any cheap deals with vague terms and conditions. There is a case whereby a client was accused and fined for subletting by the rental firm after his brother took over to drive with the client’s presence as a passenger. Not only was the deposit forfeited, the client was also fined $3,000.

To prevent this from happening to you, be sure to let the car rental company know if there is more than one authorised driver for the rental car. Some established car rental companies in Singapore do offer such complimentary service as they will need to update the insurance company to ensure sufficient coverage for the drivers.

  • Unknown Rental Source or Usage of Rental Car – Do you know where your vehicle came from or what were they used for?

Next, is the source of the vehicles! Do you know who and where are you renting the vehicle from? Who knows if the vehicle was disposed due to a defect or committed crime. For a cheap and dubious deal, you might end up incurring more cost and trouble. Imagine, what if you were offered a cheap deal without knowing that it’s a deregistered vehicle?

In Singapore, it is illegal for private car owners to rent out their vehicles via car rental companies. A customer service executive fell victim for a rental scam after renting out her Volkswagen Golf through an unregistered car rental company. She landed up with a $17,000 repair bill. Other incidents of subletting also took place in 2009, where a man conned 16 victims out of about $134,000 by renting cars from them and not paying them. He then sublet their vehicles out to others and pocketed their payments. Please do not fall for the promises of additional income and incurred losses due to greed. Do look for established car rental companies in Singapore that own their own fleet.

  • Accident – Are you covered?

When renting from illegal car rental sources, are you well-covered when an accident occurs? Probably not. Your car renter might not have sufficient insurance coverage as some insurance companies do charge extra for additional drivers. When an accident happens, the insurance company might not even accept the claims submitted as the driver (you) during the point of accident is not the policy holder. This will only cause unnecessary conflict to arise. Not only will you risk the possibility of bearing your own hospital bills, but you may also be asked to pay for the vehicle repairs!

For private car owners, you tend to bear a higher risk if your vehicle is involve in an accident during the rental period. What if the person who rented your car decides to play punk by denying all responsibility? You will have to bear the costs of repairing your car.

  • Traffic Fines – Who will be responsible to pay for fines?

In Singapore, all traffic fines will be sent to the registered car owner of the vehicle unless the driver was caught red-handed by the traffic police. Logically, the driver should be responsible for any fines issued by the authorities. However, there’re some inconsiderate hirers who do deny the act and refuse to pay for the traffic fines. Under such circumstances, the car owner will have no choice but to settle the fines.

  • Missing Vehicles

You may wonder why some rental companies actually screen potential renters before committing to a deal. Well, there have been increase concerns over rental cars being used for criminal activities. During arrest, some of these cars were impounded by the authorities, while others were severally damaged. Some have even gone missing. This is why some car rental companies go the extra mile to secure their vehicles by installing GPS for security purposes. For car owners who are renting their cars out illegally [1], do note that you may not be legally protected if the vehicle happens to go missing during the leasing period.

According to the Consumers Association of Singapore (CASE), motorcar related complaints make up 15% of overall complaints, topping the chart in 2017. Do beware of illegal car rental services to avoid any unwanted risks, liabilities and claims. Apart from illegal car rental services, there are also news reports of illegal chauffeuring services in Singapore.

In an enforcement operation carried out by the Singapore authority last August, 2 drivers were caught providing illegal chauffeuring services with Malaysian-registered vehicles. According to Today, the prices quoted were relatively cheaper as compared to the legal service providers with Singapore-registered vehicles.

All vehicles including Malaysian-registered vehicles are also not allowed to provide any chauffeured services in Singapore without a Public Service Vehicle Licence. Providers of such illegal chauffeuring services could be fine up to $3000 and/or a jailed up till 6 months with a possibility that the involved vehicle be forfeited.

Looking for reliable car rental sources in Singapore? With over 36 years of experience in the automotive industry, ETHOZ provides a wide range of automotive solutions including short term car rental, long term van or lorry rental, chauffeuring services and more.

This article was written by ETHOZ.

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1 Comment

Adrian Lee
don't really know much about this.. useful information ?

over 5 years ago